MEXICO CITY (Reuters) – Omar Mejia, recently appointed deputy governor of Mexico’s central bank, said on Wednesday the institution could consider slowing the pace of raising its key interest rate and the economy should continue to grow this year despite tight monetary policy.
“I believe that going forward we could consider slowing the pace of rate adjustments, as it is already very close to the appropriate level to consolidate a de-inflationary process,” he said in a podcast interview with Grupo Financiero Banorte.
“We predict that Mexican economic activity will continue to grow,” he added, despite restrictive monetary policy and a global slowdown which he said appears less pronounced than first forecast.
Mexico’s president has highlighted the importance of finding an equilibrium between combating inflation and allowing economic growth.
Mejia said though easing inflation was taking longer than predicted, he still expects it to meet the central bank’s target in the fourth quarter of 2024, adding that the persistently high core component remains the country’s main inflationary challenge.
Annual headline inflation in the first half of February stood at 7.76%, while the core index, which strips out some volatile food and energy prices, reached 8.38% – well past the central bank’s target of 3%, plus or minus one percentage point.
Mejia’s stance is in line with most of the central bank’s board members, who according to recent minutes from a meeting, are considering a more moderate rate hike at the next monetary policy meeting scheduled for March 30.
Mejia was confirmed as the central bank’s newest board member last month, when he pledged transparency and independence and said tackling inflation would be a priority in his role.
“I came to the bank at a time when the global economic environment presents many challenges, particularly the inflationary outlook,” he told Banorte. “However, I believe that central banks have the right tools at their disposal.”
(Reporting by Valentine Hilaire; Additional reporting by Sarah Morland and Kylie Madry; Editing by Jacqueline Wong)
